Dixon Tech to start laptop manufacturing in Aug-Sep 2024

Electronic manufacturing major Dixon Technologies announced firm plans to diversify into laptop and tablet manufacturing, eyeing commencement of production in the second half of 2024.

The Noida-based company has finalized partnerships with global brands including Lenovo and Asus for local assembly of their laptop models in India.

“The new contracts for notebooks, laptops that we have signed with some large global brands, we are targeting to start production in August, September,” confirmed Atul Lall, Managing Director, Dixon Technologies, during the company’s latest earnings call.

The timeline indicates that Dixon will kickstart laptop production within the next 6-8 months after completing necessary product approvals and trials. The company will manufacture Lenovo laptops and tablets at its existing facility in Noida which already handles smartphones and other electronics.

The segment has seen volatile policy shifts over the last couple of years. After announcing specific incentives under India’s PLI scheme to encourage domestic laptop and tablet production to reduce imports, the government later rolled back the decision.

However, the latest Union Budget restored some benefits for IT hardware companies under a modified structure. Dixon is looking to capitalize on these opportunities.

Meanwhle, tablet production — such as for client Lenovo — will commence in the current quarter itself, Dixon said.

Earlier, Dixon had managed to secure approvals under the Union government’s modified IT hardware production-linked incentive (PLI) scheme, committing investments worth INR 250 crores.

Dixon traditionally gets most of its revenue from consumer electronics and home appliances. Over the last two years, its growth has been driven by the smartphone segment, where it has won clients like Motorola and Xiaomi.

However, growth in the traditional consumer electronics segment has started flagging.

For example, in the just-concluded December quarter, Dixon managed to eke out a revenue increase of just 8% in the TV segment, shipping over 4 lakh units, despite new initiatives.

“We have rolled out India’s first ODM-based Google TV solutions from Google in the quarter under review and we’re getting an encouraging response with some of the brands already taking the solution,” said Atul Lall, MD of Dixon.

It has also partnered with Samsung for their Tizen OS to expand smart TV offerings for domestic brands. Dixon enabled manufacturing of interactive flat panel displays and expects healthier margins and order flow in coming quarters.

On the home appliances front, Dixon’s washing machine volumes grew 35% YoY to over 4 lakh units. Its new facility in Dehradun is ready for mass production across various categories.

With strong backward integration efforts, Dixon has established in-house manufacturing for most mechanical parts and tools needed for appliance production.

Senior leadership reiterated that Dixon continues to diversify product mix and drive scale as part of its long-term strategy across both these business segments.

Besides IT hardware, Dixon is also targeting opportunities in industrial electronics and power controllers for global markets under its EMS practice.

“We are getting opportunities in higher value-added business, mainly for global markets…discussions are happening with some customers,” said Lall.

By leveraging its existing capabilities and establishing credentials with top international buyers, Dixon aims to build its export revenues in completely new territories in the next couple of years.

Given the government incentives for local value addition and China+1 realignment, Dixon seems well-poised to diversify while catering to global demand through India.